Correlation Between Loop Industries and Core Molding

Can any of the company-specific risk be diversified away by investing in both Loop Industries and Core Molding at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Loop Industries and Core Molding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Loop Industries and Core Molding Technologies, you can compare the effects of market volatilities on Loop Industries and Core Molding and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Loop Industries with a short position of Core Molding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loop Industries and Core Molding.

Diversification Opportunities for Loop Industries and Core Molding

0.35

Correlation Coefficient

Loop Industries  Core Molding

Weak diversification

The 3 months correlation between Loop and Core is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Loop Industries and Core Molding Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Molding Technologies and Loop Industries is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Loop Industries are associated (or correlated) with Core Molding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Molding Technologies has no effect on the direction of Loop Industries i.e., Loop Industries and Core Molding go up and down completely randomly.

Pair Corralation between Loop Industries and Core Molding

Given the investment horizon of 90 days Loop Industries is expected to under-perform the Core Molding. In addition to that, Loop Industries is 1.59 times more volatile than Core Molding Technologies. It trades about -0.01 of its total potential returns per unit of risk. Core Molding Technologies is currently generating about 0.03 per unit of volatility. If you would invest  1,270  in Core Molding Technologies on September 14, 2024 and sell it today you would earn a total of  343.00  from holding Core Molding Technologies or generate 27.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Loop Industries  vs.  Core Molding Technologies

Loop Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loop Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Core Molding Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Molding Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Loop Industries and Core Molding

The main advantage of trading using opposite Loop Industries and Core Molding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loop Industries position performs unexpectedly, Core Molding can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Core Molding will offset losses from the drop in Core Molding's long position.

The idea behind Loop Industries and Core Molding Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.